Short-Term Rentals: The Basics

Among the issues raised in the gentrification debate is that of "short-term rentals," or in the lexicon of the city's Code Department, "Vacation Rentals." Under the city's current vacation rental licensing law, there are three types of STRs which require city operating licenses:

• Type 1: Owner-occupied (an owner's principal residence, rented in part or temporarily)

• Type 2: Non-owner occupied, single-family or duplex (entirely rented)

• Type 3: Non-owner occupied, multi-family (e.g., apartment or condo)

Of the three types, the Type 2 rentals have caused the most controversy, because it is feared they both diminish neighborhood family housing stock and drive up real estate prices – especially in central city neighborhoods. For that reason, when City Council created the licensing program, it also installed a cap on Type 2 rentals: For each census tract, only 3% of the single-family or two-family detached residential units can be licensed for Type 2 STRs.

As of this month, the Code Department currently lists just seven census tracts as having reached the licensing cap; six are south of Lady Bird Lake (Travis Heights to Zilker). Several other Downtown tracts are above 50%, and two of those are in Central East (along Seventh Street from I-35, and below East Cesar Chavez, with 47 licenses issued in those two tracts, and only two available. (Other near Eastside census tracts are at 53% of available licenses, or less.)

Code Department spokeswoman Jacqueline Ballone says the current licenses can fluctuate (generally according to major event schedules), and because the ordinance allows a "trial period" (enabling owners to "test the market" by advertising, before deciding to register with the city), it can be difficult to determine precisely how many STRs are available at any given time. Enforcement can also be uneven because of limited city staffing – for example, in the cases discussed in "Eastward Expansion," above, the F&F Ventures STRs were in fact licensed, but staff learned only from their online advertising (when alerted by the Chronicle) that the configurations and capacities of the units had been altered, triggering potential code violations. Similarly, the precise extent of "underground" or unlicensed STRs remains largely unconfirmed; Code does monitor online advertising, and can act on neighborhood complaints of unlicensed STRs.

Since the STR ordinance is itself still in development, city staff intends to return to Council sometime this year with recommendations for revision, concerning enforcement, staffing, and other provisions. When those recommendations will be ready for Council review is yet to be determined.

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